Self Build Mortgage Information

A self build mortgage is a mortgage that allows you to borrow money so that you can build your own home.  These are very specialised mortgages and release money in stages as you are progressing with the build

 


Self build mortgage advice from WPP Financial Services, Rochester, Medway, Kent, could help with this.


The Stages that are usually recognised in the build:

  1. Purchase of a piece of suitable land
  2. Lay the foundations
  3. Completing the structure up to Eaves level
  4. Complete the roof and make it watertight
  5. Complete the first and second fix including plumbing and electrical work and fixtures and fittings and plastering.
  6. Have the project signed off by Building regulations and valued.

The specialist self build mortgage may release money as arrears stage payments, payments released before each stage of the build, or advanced stage payments, payments released before each stage to pay bills for labour and materials.  Arrears stage payments are most common.  By releasing the payments in stages, the lender reduces risk as they can ensure that you are  spending the money as planned,and that you are on track to complete the project within budget.

 Compared to standard mortgages, self-builds are often recognised as higher risk and therefore require larger deposits, a minimum of 15% or often higher.  The rates of interest on the mortgage are often higher too, although once the property is complete and valued, you may be able to switch to a better deal.  

 A big advantage of a self-build mortgage is that it can save you lots of money as you only have to pay duty on the value of the land itself if the cost of that land exceeds £125,000.

It is common that the value of the final property also ends up being more than the land, total costs of materials and building work.  As expected the mortgage application will require more paperwork including detailed plans showing architectural drawings of the building with specifications, planning permission and building regulations approval.

Stages of the Self Build

Funds are typically released as following:

self build mortgages, brick and block, wpp financial services, rosemount financial solutions, rochester, medway, kent

Complete Self Builds

 

  • Purchase of land
  • Foundations and Footings
  • Building complete to eaves height
  • Building is watertight
  • First fix (plumbing and electrics)
  • Second fix
  • Building regulations approved completion
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Conversion

 

  • Purchase of land and structure
  • Completion of main structural load bearing conversions
  • First fix (plumbing and electrics)
  • Second fix
  • Building regulations approved completion

Self Build Mortgage Interest Rates

Interest rates are often higher than standard mortgages and can be from around 4-6% per annum, however, once completed. lenders may permit the borrower to ‘switch’ to a lower rate of interest.

Self Build Mortgages are regulated by the Financial Conduct Authority.

Considerations for Self Build Mortgages

What type of construction do you intend to make?

You will need somewhere to live during the development work.

Your total budget; make sure you know how much the build cost will be and include some contingency fund should you go over budget or if any events go wrong that you have not planned for.Complete the project.

Stages of the Self Build

Funds are typically released as following:

self build mortgages, brick and block, wpp financial services, rosemount financial solutions, rochester, medway, kent

Complete Builds

 

  • Purchase of land
  • Foundations and Footings
  • Building complete to eaves height
  • Building is watertight
  • First fix (plumbing and electrics)
  • Second fix
  • Building regulations approved completion
self build mortgages, timber frame, wpp financial services, rosemount financial solutions, rochester, medway, kent

Conversion

 

  • Purchase of land and structure
  • Completion of main structural load bearing conversions
  • First fix (plumbing and electrics)
  • Second fix
  • Building regulations approved completion

Site Insurance and Building warranty

Quite often your lender will require a 10-year structural warranty policy in place before they will release funds.

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